Ex-finance minister says it’s time for Alberta to talk tax hikes

James Wood, Calgary Herald12.19.2012

Ron Liepert, right, shown in 2011 when he was Alberta’s finance minister, with Doug Horner, the man who now holds the finance minister’s job. “Nobody likes to pay more taxes. But everybody wants the services,” Liepert says.Herald files/Edmonton Journal

The architect of this year’s provincial budget says Alberta’s current financial woes show it’s time for Albertans to talk taxes.

Former Tory finance minister Ron Liepert, who retired in April, said Thursday he hopes the Progressive Conservative government will have the courage to consider its revenue options in the face of a mounting budget crisis.

“We need to have a discussion about how we pay for services on an ongoing basis. I’m not going to suggest one method is better than the other, but I just don’t understand why there’s this reluctance to have this discussion,” said Liepert.

“I remember Premier (Ed) Stelmach and now with Premier (Alison) Redford, you box yourself in by saying, ‘This is off the table, that’s off the table.’ And then when the sh— hits the fan, you don’t have many options left. I just think Albertans are prepared to have that discussion.”

The comments came a day after Doug Horner, who succeeded Liepert, warned the province faced a grim financial picture because the steep discount for Alberta heavy oil compared to North American world prices is hammering the provincial treasury.

While everything is on the table for program cuts, both Horner and Redford have ruled tax hikes or new levies out of consideration.

Liepert, who was given the finance post by Redford in the fall of 2011, drew fire while in office for musing about implementing a provincial sales tax or a reintroduced health-care premium.

In the February throne speech before the spring election, the government promised a sweeping review of spending, savings and taxation that would produce “foundational change.” But with the election looming, any talk of taxes was dropped and Redford promised no new taxes this term or increases to existing levies.

On Thursday, Redford stuck to her no-tax pledge, saying Albertans were against it when her government floated the idea.

“We’re experiencing difficult fiscal times just at the moment, but I think the framework we have in place allows us to manage with where we are — and so we will just proceed on that basis,” she said in an interview.

Liepert’s February budget projected an $886-million deficit this year.

But a glut of American oil and a lack of pipeline capacity out of Alberta have widened the price differential close to $40-a-barrel this month and helped push the projected deficit up to $3 billion. The situation is expected to continue for some time and Horner suggested the government may not even be able to balance its operating budget in 2013-14, breaking an election promise.

“I think the province is in deep trouble financially,” said economist Jack Mintz, the University of Calgary fiscal and tax policy expert.

Mintz, who chaired a government-appointed panel on finances in 2007, said the province has a high rate of spending and low rates of taxation, including its 10-per-cent flat tax on income. That makes it difficult to balance the budget on expenditure cuts alone, he said.

Mintz, chair of the U of C’s School of Public Policy, has long favoured a harmonized sales tax for the province. But the government could also look at non-tax measures such as introducing toll roads on new highways.

In the last election, both the Liberals and NDP called for hikes to personal income tax on high earners, as well as corporate tax increases.

“We as Albertans have to learn we have to pay for what we use through income taxes,” Liberal MLA Kent Hehr said Thursday.

“We can’t continue to paper over deficits with non-renewable oil and gas revenues. We’re seeing that even though that’s a tremendous amount of money, it’s not predictable, sustainable funding, and we shouldn’t be basing our budgets on that.”

But Rob Anderson, finance critic for the Wildrose Opposition, said any focus on taxation is misguided in a $40-billion budget.

“We just do not have a revenue problem. We have the most money of any province in the country on a per-capita basis coming in ... the problem is we have built a massive big government operation that needs $100-a-barrel oil with no differential to have a balanced budget,” he said.

The idea of hiking taxes also drew a thumbs-down from the Canadian Federation of Independent Business. CFIB Alberta director Richard Truscott said results of a recent poll of the organization’s members show only two per cent favoured a tax hike to balance the budget, while only one per cent wanted a sales tax.

But Liepert said appointing an expert panel to engage with Albertans and conduct a thorough review of the province’s revenue options could make taxation less politically noxious.

“Nobody likes to pay more taxes. Nobody likes to pay the taxes you’re paying today. But everybody wants the services,” he said.

“An election isn’t looming. What better time to have that discussion than right now?”

jwood@calgaryherald.comWith files from Darcy Henton, Calgary Herald

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